All three of the major averages were down as much as 1.4%, before ending lower by about 0.8%. The Dow Jones Industrial Average fell 350 points at its worst levels, and settled down 206 points.

In a statement, May said that her Cabinet held a "long, detailed, and impassioned debate" but eventually agreed to move ahead with the deal. The draft agreement will now pass to the EU council later this month, where it will be inspected by the EU's other 27 countries and voted on.

Meanwhile, bank stocks were under pressure, with the KBW Bank Index falling 1.5%, after Rep. Maxine Waters, who is set to take charge of the House Financial Services Committee, said that "the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end."

Looking at the economy, consumer prices in the US climbed at a 2.5% year-over-year clip, their fastest pace in nine months, as gains in the costs of gasoline and rents made the biggest contribution.

Modest buying across the US Treasury market pushed yields lower by as much as five basis points, with the benchmark 10-year yield easing to 3.11%.

And bitcoin was down more than 13% at its worst levels of the day as traders positioned themselves for the upcoming hard fork in its rival, bitcoin cash. The cryptocurrency briefly slipped below $5,400 — touching its lowest level since October 2017.